To see how closely water and energy are linked, you only have to look at the west coast of the US, where four years of severe drought have led to historically low levels in water reservoirs, forcing some hydroelectric plants to shut down or cut production.

It’s little wonder, then, that new micro-hydropower technology that allows cities to generate electricity from the water running through their pipes is gaining worldwide attention.

Water-hungry energy, energy-hungry water

Gleick is president of the Pacific Institute, a water thinktank which reported in March that in the three years to October 2014 hydropower’s contribution to California’s electricity supply fell to less than 12%, from a previous average of 18%.

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This meant a switch to a heavier reliance on more expensive natural gas, at a cost of approximately $1.4bn a year to California’s homes and businesses. It has also come at heavy environmental cost, with researchers estimating an extra 14m tons of CO2 emitted, along with an increase in other pollutants.

Water provision itself is demanding increasing amounts of energy, says Laura Wisland, energy analyst at environmental lobby group the Union of Concerned Scientists.

A recent report Wisland co-authored points out that nearly 20% of California’s electricity is consumed by the state’s water sector – something that is expected to increase with intensified groundwater pumping, water treatment and water recycling to cope with the state’s prolonged droughts.

Harnessing electricity

To tackle the high demand water and energy place on one another, micro-hydropower is emerging as a technology with potential. In January, Portland, Oregon became the first city to harness electricity from its water pipes and sell it to the electricity grid.

The city is using a technology developed by Lucid Energy, which says it will generate 1,100 MWh of electricity a year – the equivalent of powering 150 homes – from four turbines installed along a 50-foot section of Portland’s water pipes.

Lucid is not the first company to innovate with in-pipe hydropower. This summer Rentricity, a New York startup announced it had started work on a large irrigation pipeline project in Utah that will be a net exporter to the power grid. In the UK, Welsh Water and Scottish Water have been generating power in their pipes for four and two years respectively.

But Bill Kelly, who this week became Lucid’s chief executive, replacing founder Gregg Semler, says its five-bladed spherical turbines are unique in not impeding the flow of water.

Financing expansion

The company is also the first to sign a power-purchase agreement with a utility, Portland General Electric (PGE), to finance the project. PGE’s involvement comes as it looks to replace a coal power plant, due to close in 2020, by investing in a portfolio of renewable technologies.

Jonathan Fink, vice president for research and strategic partnerships at Portland University, says the LucidPipe technology is “pretty much a win-win”. “Like a lot of cities, water coming into Portland is gravity-fed, and [the water utility has] to slow down the water as it comes down the hill. Typically, the energy [of the rushing water] is lost as heat. With Lucid’s technology they can convert it into electricity,” he says.

The big challenge for uptake of in-pipe hydropower is cost as it involves a big upfront capital investment, says Kelly. Portland’s water board, like in many other US cities, is publicly owned and rate-paying voters do not want to see higher bills.

Lucid’s $1.7m project in Portland was paid for by private investors Harbourton Alternative Energy, which will sell $2m worth of power over 20 years to privately owned PGE. After 20 years Portland Water Bureau will be given the right to buy the system and own the electricity it produces.

While the capital cost is similar to solar and wind per installed kilowatt, Semler says Lucid’s turbines produce electricity three to four times more cheaply because water flows around the clock and at a constant rate.

In-pipe hydro systems are also impervious to weather and climate, unlike California’s dwindling reservoirs, and have none of the environmental impact of big dams.

Semler, whose home state of Oregon gets more than half its energy from hydropower, is realistic about the LucidPipe technology’s potential. “This is energy recovery from water. It’s not a strategy that will replace large dams and power plants.”

The project is possible to scale – a city could theoretically have hundreds of the turbines throughout its pipe system. For a big city, says Semler, using Lucid’s pipe system throughout its water infrastructure could reduce the cost of delivering water by 20% to 30%. However, the technology may not be cost effective on a large scale unless a city was replacing or installing new water infrastructure.

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Market opportunities

Lucid sees industrial users of water pipeline – agricultural irrigation schemes, sewerage treatment facilities, energy companies – as another large market. It recently signed a deal with Cadiz, a water resource development company in southern California, to provide power for a railway line by harnessing the water flow in a new pipeline flowing into the Colorado river aqueduct .

Such schemes cut CO2 emissions and make commercial sense, says the Union of Concerned Scientists’ Wisland, particularly for water companies exposed to volatile prices for alternatives such as natural gas. “The more they can generate their own energy, the more they will insulate themselves from that,” she says.

Fink agrees. “There’s a connection between the amount of energy to move water around and the amount of water needed to generate electricity,” he says. “This technology is at the intersection of that.”